Call for Clarity on the Enforcement of the Sulphur Cap

Predictions of vessels losing propulsion in busy shipping lanes or suffering loss of electrical power were, thankfully, proved incorrect. By and large, the industry – in particular ships’ crews – have managed the transition very well.

It hasn’t all been plain sailing, however. The backend of 2019 saw concerns being raised on the poor stability characteristics of some of the new very-low-sulphur fuel oil (VLSFO) products and the risk of incompatibility between stems, which did indeed become realised to a certain extent throughout 2020. There were some operational issues that were perhaps not as well foreseen, such as increased liner wear of engines attributed to the poor matching of cylinder lubricating oil with the fuel in use combined with too infrequent scavenge inspections.

These have all had some sort of impact on us at North, resulting in claims and, more prominently, disputes amongst shipowners, charterers and fuel suppliers.

However, what has kept us busiest are the reports of potential marginal non-compliance, which sounds innocuous to say the least.

The problem scenario

The vessel requests compliant bunkers to be delivered. The party ordering the bunkers (either the owner or time charterer) specifies compliant fuel to be supplied to the vessel.

Upon completion of bunkering, the supplier issues a bunker delivery note (BDN) which declares the fuel to be compliant (0.50% S or less). The receiving vessel then sends a representative sample drawn during bunkering to an independent laboratory where it is tested against ISO 8217 listed parameters for commercial purposes.

Several days later, the test result returns a sulphur content between 0.51% and 0.53%, therefore indicating non-compliance with the limit specified in MARPOL Annex VI.

What happens next? Are the bunkers off-spec, non-compliant or both? Can the fuel be used? Who should be notified? Will the vessel be targeted by the authorities and what action will they take? Should it be debunkered?

This is where confusion reigns, leading to commercial disputes and, in some cases, de-bunkering.

Are the bunkers off-specification?

According to existing industry guidance issued by organisations such as IBIA and CIMAC, if the receiving vessel’s own sample returns a result of 0.53% or less, they cannot bring a claim against the supplier.

The rationale behind this 0.53% cut-off mark is ‘single-test reproducibility’, which raises its head frequently in this issue. In very simple terms, it is an allowance applied to a lab test result that recognises the limitations on accuracy of a single test.

If the vessel’s sample test result is over 0.53%, a claim against the supplier may be initiated. The supplier’s retained sample is usually contractually binding and therefore tested. If that test returns a result of 0.51% or more (single-test reproducibility is not applied in this stage – just to confuse matters!), it is deemed off-spec for commercial purposes.

However, these are only guidelines and a supplier may have different terms in their bunker contract.

The situation becomes more complex in situations where the time charterer provides the bunkers under the terms of the charterparty. While the supplier will consider their sample to be the binding commercial sample between them and the fuel purchaser, this is unlikely to be the binding sample under the charterparty, which is usually that drawn by the vessel. This could lead to situations where the time charterer is liable to the shipowner but is unlikely to be able to recover losses from the supplier.

Are the bunkers non-compliant?

If the receiving vessel’s own sample returns a result greater than 0.50%it does not automatically mean that the bunkers are non-compliant with MARPOL.

Non-compliance can only be confirmed by testing any of the MARPOL delivered sample, the MARPOL in-use sample or the MARPOL onboard sample.

Commercial samples – such as the vessel’s own sample – should not be considered evidence of definitive non-compliance. However, very few administrations have confirmed this explicitly, and experience suggests that some port state control functions are taking a contrary view.

There are also reports of port state control officers in some countries not applying the single-test reproducibility tolerance to in-use samples during their inspections. It is not mandatory for port state authorities to apply this tolerance when testing the fuel in use, but the IMO are promoting its early adoption. Again, the lack of a consistent approach by port states around the world causes confusion for calling vessels.

Vessels trading to the United States will of course switch to 0.10% max sulphur fuel before entering the North American emission control area (ECA). But this does not eliminate the risk of contravening MARPOL. US lawyers have indicated that any vessel proceeding towards the United States with fuel on board with a sulphur content greater than 0.50% may be in violation of the carriage ban, regardless of whether it is to be consumed.

Who should be notified?

In general, shipowners have been advised to follow the notification process in MEPC.321(74) 2019 GUIDELINES FOR PORT STATE CONTROL UNDER MARPOL ANNEX VI:

“In addition, if the BDN shows compliant fuel, but the master has independent test results of the fuel oil sample taken by the ship during the bunkering which indicates non-compliance, the master may have documented that through a Notification to the shipʹs flag Administration with copies to the competent authority of the relevant port of destination, the Administration under whose jurisdiction the bunker deliverer is located and to the bunker deliverer.”

However, as the document’s title suggests, this is the IMO guidance for port state control. There is no published guidance to shipowners. And, by stating that “the master may…” this would imply that the notification process is merely voluntary and there is no obligation to notify the referenced parties.

There is also uncertainty on what is meant by “indicates non-compliance”? Is the IMO’s intention that the notification process applies when the ship’s sample test result exceeds 0.50%, or is it 0.53% to allow for single-test reproducibility?

Providing clarity on the notification process could remove a massive amount of doubt.

Will the vessel be targeted by PSC?

It is important not to disincentivise reporting of potentially non-compliant fuel as the IMO GISIS module – which allows flag states report on behalf of shipowners – relies on these reports to identify suppliers that provide non-compliant fuel.

It stands to reason that if PSC target a vessel for inspection following the submission of a voluntary notification, it is likely to disincentivise reporting.

How port state authorities around the world are acting upon these notifications is not yet known; and as COVID-19 impacts their current inspection protocols, we may not be seeing an accurate picture on how this will be dealt with in a post-pandemic world.

However, the European Maritime Safety Agency (EMSA) Inspection Guidance states clearly that EU ports will target a vessel for inspection if they submit a voluntary notification of potential non-compliance.

A call for clarity and consistency

Marginally off-spec bunkers are causing lengthy disputes and, in some cases, de-bunkering. Considering the carbon footprint of the de-bunkering process, these developments could be considered as being at odds with established industry environmental goals.

Shipowners need to be confident that the rules are clear and that there is a consistent approach to the enforcement of the rules around the world.

Find out more

We have a wealth of information on the IMO 2020 sulphur cap including articles, news and resources. Find us at: https://www.nepia.com/topics/2020-vision/